Arch MI Secures Over $341 Million of Indemnity Reinsurance from Insurance-linked Security Transaction

The Associated Press

GREENSBORO, N.C.--(BUSINESS WIRE)--Mar 15, 2019--Arch Mortgage Insurance Company (“Arch MI”) announced today that it has obtained $341,790,000 of indemnity reinsurance on a pool representing nearly $23 billion of mortgages from Bellemeade Re 2019-1 Ltd., a special purpose reinsurer. This insurance-linked security (ILS) transaction provides Arch MI with collateralized coverage for potential losses on a portion of its mortgage insurance (MI) portfolio.

The reinsurance is for a portfolio of MI policies issued by Arch MI and affiliates through 2015. More than 70% of the policies covered in the transaction were issued prior to 2009. The most senior M-1A class notes received an A- rating from Morningstar Credit Ratings, LLC.

This is Arch’s first 2019 ILS transaction in what has become a programmatic issuance from Arch MI, which conducted three Bellemeade transactions garnering $1.534 billion of reinsurance protection for loans representing more than $136 billion of unpaid principal balance in 2018. This transaction is notable in that nearly half the covered mortgages have been modified under GSE or servicer modification programs.

Bellemeade Re 2019-1 Ltd. is funding its reinsurance obligations through the issuance of four classes of amortizing notes with 10-year legal final maturities.

“This subject portfolio is unique in that it contains policies covering loans originated during the crisis, some of which have been modified,” said Jim Bennison, EVP, Alternative Markets for Arch Capital Group (U.S.) Inc. “Those policies, plus the pre- and post-crisis collateral in the pool, resulted in a transaction that was very appealing to investors and demonstrates Arch’s continued efforts to creatively manage capital and risk positions in our mortgage business.”

About Arch Mortgage Insurance Company

Arch Capital Group Ltd.’s U.S. mortgage insurance operation, Arch MI, is a leading provider of private insurance covering mortgage credit risk. Headquartered in Greensboro, North Carolina, Arch MI's mission is to protect lenders against credit risk, while extending the possibility of responsible home ownership to qualified borrowers. Arch MI’s flagship mortgage insurer, Arch Mortgage Insurance Company, is licensed to write mortgage insurance in all 50 states, the District of Columbia and Puerto Rico. For more information, please visit archmi.com.

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The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward−looking statements. This release or any other written or oral statements made by or on behalf of Arch Capital Group Ltd. and its subsidiaries may include forward−looking statements, which reflect our current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward−looking statements.

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